In the Smoking Tent

Big oil and big biz win again as Californians lose large in the new budget

By Richard Holober

California's "cuts only" budget deal is a horror.

Doors will slam shut next year on 35,000 applicants to the California State University system. UC Regents previously cut 2009 freshman enrollments by 10 percent. Both university systems have approved 20 percent tuition and fee hikes since the start of 2009 that will squeeze more students out of higher education.

Another $4 billion in new cuts to kindergarten through community-college education mean overcrowded classrooms, fewer teachers and tens of thousands of youths denied college entrance and job-training programs.

Deep new cuts to health services will stop hundreds of thousands of poor children from obtaining health insurance. Many thousands of low-income, frail, elderly and disabled persons will suffer reductions to in-home support programs. Local government services will reel from billions the state "borrows" from local property and transportation tax revenues.

Don't believe headlines that proclaim this a budget that everyone hates. Big oil and other profitable corporations made out like bandits.

The budget deal leaves intact $2.5 billion in new tax breaks for the biggest corporations that were silently slipped into budget packages approved in 2008 and 2009. These tax cuts do nothing to encourage any worthwhile goals such as job creation. They are handouts, plain and simple, that politicians granted to business giants at the same time they were raising taxes on working Californians.

The budget deal doesn't tax oil extracted in California. We're the third biggest oil-producing state and the only one that fails to tax oil drilling. ExxonMobil, Shell, Chevron and Occidental Petroleum are California's dominant oil producers. They reported record combined profits of $95 billion in 2008, but they don't pay a penny to the state for the privilege of pumping oil from the ground.

Instead, the budget deal gives big oil another win. Forty years after a massive oil spill off the Santa Barbara coast launched the modern environmental movement, the budget reopens that area to new offshore oil leases.

The two-thirds budget and tax adoption rules made a "cuts only" budget inevitable. But acknowledging this sad truth does not answer the question of what went wrong.

Republican lawmakers in Sacramento haven't wavered in their devotion to cutting government services and deregulating business, even after voters delivered Republicans a devastating repudiation last November. The two-thirds rule gave the dwindling Republican minority a short-term tactical advantage in crisis budget talks, which they exploited. The minute Democratic leaders sequestered themselves into Gov. Schwarzenegger's "smoking tent" to negotiate the closed-door deal, the majority party and its progressive allies lost.

Democrats will now produce the lion's share of votes for a punitive budget. Republicans will likely offer up the handful of votes needed to enact the budget. Democrats will own this budget and Republicans will be free to disavow it.

We are now a full year into crisis budget deals and do-overs. As the state's economy continues to worsen, budget assumptions will unravel yet again. Don't be surprised to see a new round of midyear cuts before 2010. Let's resolve now that crafting the best smoking-tent deal cannot substitute for a strategy in the next round of budget cuts.

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It will take a unified campaign by labor and progressive community-based constituencies, mobilizing around values that resonate with voters, to put us back on offense. The November 2008 realignment of American politics makes this a fight we can win. It is time to prepare for the long war to win budget and tax fairness that we can no longer avoid.

Richard Holober is the executive director of the Consumer Federation of California, a nonprofit advocacy organization. Each year, CFC testifies before the California legislature on dozens of bills that affect millions of our state's consumers. The Consumer Federation of California also appears before state agencies in support of consumer regulations.

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